Dave McGuire is featured in Accounting Today as he discusses how the IRS’s recent Audit Techniques Guide for the Tangible Property Regulations
can help business taxpayers avoid problems with IRS examiners in interpreting the 2014 regulations on how to treat expenses incurred for materials, supplies, repairs and maintenance.
Most taxpayers have finalized implementation of the Tangible Property Regulations over a year ago. These regulations covered how to determine when an expenditure is capital versus when an expenditure can be treated as an expense. In most situations, the implementation of these regulations is considered to be taxpayer favorable. Most taxpayers who correctly implement these regulations will find that more items can be expensed as compared to the old rules.
During the implementation process, many taxpayers were required to file a Change in Accounting Method, also known as a Form 3115. Due to the number of these forms and the new changes related to the Tangible Property Regulations, the IRS issued an Audit Techniques Guide on Sept. 14, 2016, detailing how auditors are to deal with these new changes.
While an Audit Techniques Guide does not set precedent, it does provide valuable insight into how the IRS interprets the new regulations. Most of the guidance offered in this manual follows closely how most tax preparers were implementing these rules. However, it is important to highlight a few areas in this new guidance.
Read the full article here.